Boohoo in good cheer as sales predicted to grow further

Online fashion pioneer Boohoo has delivered a bumper rise in sales and profits and raised already-ambitious forecasts for future growth.Its fast-fashion strategy has seen young consumers flock to its sites, including recently acquired brands Nasty Gal and PrettyLittleThing. Revenues doubled and profits jumped 41% in the six months to 31 August, compared with the previous year.However, the rise did not stop Boohoo’s share price falling about 10%.Although the company upgraded its forecasts on future sales revenue, a failure to also raise profit guidance led to a sell-off of the shares, which have soared in value this year.”The strong performance in the first half-year and our expectations for the second half have given us confidence to raise guidance for the full year,” said joint chief executives Mahmud Kamani and Carol Kane in a statement.The Manchester-based company has seen sales and its share price soar in recent years, as younger customers have been won over by its relatively low prices on up-to-date fashion.Profit doubtHowever, the shares slipped almost 10% in late morning trading, valuing the company at £2.7bn. The stock has risen 142% in the past 12 months.Analysts said that its recent strong performance and over-optimistic expectations had led to the share price fall on Wednesday.Adam Tomlinson, research analyst at Liberum, said that although Boohoo forecast higher revenues, there was no further upgrade on profit guidance.”While top line momentum continues to be very strong, management is increasing investment into the product, pricing and marketing to strengthen the platform for future growth”, he saidBoohoo’s business model, known as “test and repeat”, is built around market-testing a wide range of items on its site. The ones that prove popular are then reordered.By manufacturing half of its products in the UK the firm says its can offer typical turnaround times for new styles of about four to six weeks.

Rather than rely on traditional marketing, Boohoo focuses on social media influencers, bloggers, student campus tours and events such as shoots with reality TV stars from the hit summer show Love Island, to win over its target market of 16-30 year olds.’Diversity’This year Boohoo acquired another fast-fashion brand aimed at younger consumers, PrettyLittleThing, which was founded by Mr Kamani’s son, and offers “hottest fashions and celebrity looks”.It also bought the intellectual property of US retailer Nasty Gal, which filed for bankruptcy in February.Mr Kamani and Ms Kane said that PrettyLittleThing was gaining recognition amongst target consumers both in the UK and internationally, adding that boohooMan was also performing well.”The integration of the two new brands has been successful, adding diversity to our business,” they said.Active customer numbers were up 29% over the year, the company added.
Source: BBC